Chapter 1313: VOLUNTARY ASSIGNMENTS

When a person, partnership, association, or corporation, makes
an assignment to a trustee of property, money, rights, or credits, in trust for
the benefit of creditors, within ten days after the delivery of the assignment
to him and before disposing of any property so assigned, such assignee shall
appear before the probate judge of the county in which the assignor resided at
the time of executing the assignment, produce the original assignment, or a
copy of it, cause it to be filed in the probate court, and enter into a bond,
payable to the state, in such sum and with such sureties as the court approves,
conditioned for the faithful performance of his duties. The court may require
the assignee, or any trustee subsequently appointed, to execute an additional
bond whenever the interests of the creditors of the assignor demand it.

An assignment for the benefit of creditors as provided in
section 1313.01 of the Revised Code is
effective only from the time of its delivery to the probate judge, and the
exact time of such delivery shall be indorsed thereon by the judge, who
immediately shall note the filing on the journal of the court. Such assignment
may be delivered by the assignor to the judge either before or after its
delivery to the assignee.

If ten days after the execution of an assignment for the
benefit of creditors, the original or a copy of it has not been filed in the
probate court, or if the assignee named thereon fails for that time to give
bond, on application of the assignor, or any of his creditors, the court shall
make an order removing such assignee and appoint a trustee in his place. If
more than one assignee is named in the assignment, and some fail to give bond,
the court may permit the assignee complying with sections
1313.01 and
1313.02 of the Revised Code to
qualify and enter upon the discharge of the duties of the trust.

An assignee or trustee for the benefit of creditors appointed
by the probate court, who has qualified, may resign his trust with the consent
of the court. In case of the death, removal, or resignation of a sole assignee
or trustee, the court shall appoint one or more trustees in his place.

If one or more assignees or trustees have not died, resigned,
or been removed, the court either may fill the vacancy, or allow the remaining
assignees or trustees, to execute the trust, as it deems best for the trust. At
any time, on application of a majority of the creditors in amount, the court
may appoint an additional trustee.

When a creditor of an assignor provided for in section
1313.01 of the Revised Code, files
a complaint alleging that the assignees named in the deed of assignment, or the
trustees appointed by the probate court, for the benefit of creditors are not
suitable persons to administer the trust, or that their administration thereof
will not be for the best interests of the creditors and assignor, the court
thereupon shall issue a citation to such assignees, or trustees, and to the
assignor if resident within the state, to appear before it at a time to be
named in the citation. If, on the hearing, it appears to the court that such
complaint is true, and a petition is filed with the court, signed by creditors
of the assignor, who own not less than one thousand dollars of debts against
him, and their validity is shown by the schedule of debts on file or otherwise
established to its satisfaction, praying for permission to elect trustees, the
court by its order shall fix a time for such election and cause notices to be
sent by mail or otherwise to each creditor of the assignor, specifying a time
when the creditors shall meet at the courtroom for the election of trustees.

At an election under section
1313.05 of the Revised Code
creditors representing fifty per cent or more of the debts of the assignor,
present or represented by attorney, may proceed to the election of trustees for
the benefit of creditors, a majority in value of all the debts represented at
such meeting being necessary to a choice.

The proceedings of the meeting showing what creditors were
present, the amount of the debts held by them respectively, and who cast their
several votes must be made out and signed by the president and secretary of the
meeting and filed with the probate court.

If the court approves the choice, and the trustees elected
appear within ten days thereafter and give bond, the court shall appoint them
as trustees, and remove the preceding assignee or trustee.

The summary determination of the court as to who are creditors
and the amount of their claims under section
1313.05 of the Revised Code, has
no effect as to the validity of such claims, except for the purpose of such
election.

A surety of an assignee or trustee for the benefit of
creditors, or the executor or administrator of such surety, at any time may
make application to the probate court to be released from the bond of such
assignee or trustee, by filing his written request therefor with the judge of
such court, and giving at least five days' notice, in writing, to such assignee
or trustee. If, upon the hearing, the court is of opinion that there is good
reason therefor, it shall release such surety. The death of a surety is good
cause for release.

An assignee or trustee for the benefit of creditors at any time
may make application to the probate court for the release of his sureties, by
filing his written request with the judge of such court, and giving at least
five days' notice, in writing, to such sureties. If, upon the hearing, the
court is of opinion that there is good reason to release said sureties it shall
order said assignee or trustee to file an account, as provided by law, and said
sureties shall be released upon said assignee or trustee filing a new bond and
its approval by the court.

If an assignee or trustee for the benefit of creditors fails to
give new bond, as directed by the probate court, he must be removed and his
letters superseded. The original sureties shall not be released until the
assignee or trustee gives new bond but the original sureties are liable for
said assignee or trustee's acts only from the time of executing the original
bond to the filing and approval by the court of the new bond.

When the probate court appoints a trustee for the benefit of
creditors, whether in place of an assignee or of a trustee previously
appointed, such trustee, within ten days after his appointment, shall give bond
or, failing to do so, he may be considered as declining the appointment, and
the place shall be filled. When a trustee has given bond, he succeeds to all
the rights, powers, and privileges of the preceding assignee or trustee. The
court may make and enforce all orders necessary to put him into possession of
all property, moneys, books, papers, evidences of title, and other effects
covered by the assignment, or in any way belonging to the trust. By suit in the
court of common pleas, or otherwise, such trustee may compel the delivery to
him of all such property, moneys, books, papers, evidences of title, and other
effects.

On the resignation or removal of an assignee or trustee for the
benefit of creditors, he shall file and settle his account without delay, and
on the death of such assignee or trustee, his legal representative must file
and settle such account without delay. Immediately after the settlement, the
assignee or trustee, or his legal representative, shall pay over to his
successor all moneys found due from him to the trust. On failure to do so, or
to file and settle such account, or deliver over to his successor all property,
moneys, books, evidences of title, papers, and other effects belonging to the
trust, such successor may proceed against such assignee or trustee by action in
the court of common pleas or otherwise, on his bond or his legal representative
and the sureties in such bond.

When the probate court appoints a trustee for the benefit of
creditors to act in place of the assignee of a debtor, the appointment and
qualification of the trustee operates as a conveyance to him of all the
property originally assigned to such assignee.

Each assignee or trustee for the benefit of creditors appointed
on the failure of the assignee of a debtor to qualify, within thirty days after
giving bond, must give notice of his appointment in some newspaper of general
circulation in the county, for three successive weeks.

Immediately upon the assignee of a debtor giving bond, or if
said assignee fails to give bond, then upon the trustee for the benefit of
creditors giving bond, the probate court shall appoint three suitable
disinterested persons appraisers of the property and assets of the assignor.
Such assignee or trustee, within thirty days after giving bond, unless for good
cause the court allows a longer time, must make and file therein an inventory,
verified by his oath, of all the property, moneys, rights, and credits of the
assignor included in the assignment, which have come to his possession or
knowledge, together with an appraisement thereof by such appraisers under oath.
If any part of the estate or effects is in any other county, the assignee or
trustee may have appraisers, as to such part of the estate and effects,
appointed by the probate judge of such county.

If the assignment for the benefit of creditors, includes real
property situated without this state, it is not necessary to have it appraised,
but the assignee, or trustee appointed, shall sell such real property at public
or private sale, and the sale shall be confirmed, if the court finds that it
has been made in good faith for a fair price. At the time of filing the
inventory as provided in section
1313.15 of the Revised Code, the
assignee or trustee also must file a schedule of all the debts and liabilities
of the assignor within his knowledge, which shall be verified by the oath of
the assignee or trustee, and contain the post-office address of each of the
alleged creditors, so far as this can be given.

No assignment for the benefit of creditors shall include or
cover any property exempt from levy or sale on execution, or exempt from being
applied to the payment of debts by any legal process, unless in the assignment
the exemption is expressly waived.

No such assignment shall include any property belonging to the
wife of the assignor, nor require the assignor to deliver up any of such
property.

Appraisers appointed under section
1313.15 of the Revised Code, shall
set off in the way that appraisers of property levied on or attached are
required to do, exempt property that has to be selected by the debtor. If the
setting off is omitted, at any time after the appraisal and before sale, the
court may order it to be done by the appraisers.

The probate judge, at any time before the final settlement of
the accounts of an assignee for the benefit of creditors, may require his
attendance, or that of any other person as a witness, and examine him upon
oath, as to all matters appertaining to the estate of the assignor or to the
administration of the trust, and, upon or after such examination, make and
enforce any orders upon proper parties, which said judge deems necessary to
prevent a fraudulent transfer or change in the property or effects of the
assignor or the allowance or payment of any unjust or fraudulent claim out of
his estate.

On application of an assignee for the benefit of creditors or
of a creditor, or without application, the probate judge may require the
assignor, upon reasonable notice, to attend and submit to an examination on
oath as to the disposal of his property, his trade and dealings with others,
and his accounts concerning them, as to all debts due or claimed from him, and
to all other matters concerning his property and estate, and the due settlement
thereof, which examination, at the request of any party to the proceeding, may
be reduced to writing.

An assignee or trustee for the benefit of creditors shall
convert the assets received by him into money, and shall sell the real and
personal property assigned, including stocks and such bonds, notes, and other
claims as are not due and which probably cannot be collected within a
reasonable time, at public auction, either for cash or upon such other terms as
the probate court orders.

Notice of the time and place of the sale of real property
assigned for the benefit of creditors, shall be given by advertisement in some
newspaper of general circulation in the county where such property is situated,
for four consecutive weeks. The real property shall not be sold for less than
two thirds of the appraised value thereof, but shall be subject to
reappraisement as upon execution at law.

Notice of the time and place of the sale of personal property
assigned for the benefit of creditors, shall be given for at least ten days
prior to the day of sale, by advertisement in some newspaper of general
circulation in the county, or by posting written or printed notices thereof in
at least fifteen public places in the county, not less than five of which must
be posted in the township in which the sale is to be held.

When the probate court is satisfied that it would be for the
advantage of the creditors of the assignor to sell part, or all, of the real or
personal property in this state assigned for the benefit of creditors at
private sale, it may authorize the assignee or trustee for the benefit of
creditors to sell it either for cash or upon such other terms as the court
orders. No real property lying in this state shall be sold for less than two
thirds of its appraised value, nor shall any personal property be sold for less
than two thirds of its appraisement, unless upon good cause shown the court
orders the assignee or trustee to sell it for a less amount.

Any property, ordered to be sold by the probate court at
private sale under section
1313.24 of the Revised Code, not
sold within the time prescribed, shall be ordered to be sold at public auction,
as though a private sale had not been ordered.

With the approval of the probate court an assignee or trustee
for the benefit of creditors may compromise or sell any claim or demand, due or
owing to the assignor, which is desperate or difficult of collection, and also,
with like approval, complete and enforce all sales of the real property made by
the assignor.

Reports of sales of real property and personal property made
under sections
1313.21 to
1313.31, inclusive, of the Revised
Code shall be returned to the probate court within the time prescribed. After
having carefully examined the return, if satisfied that the sale has been
legally made, the court shall confirm it and order the assignee or trustee to
make a deed to the purchaser for the property sold. The court also may require
in the order that deferred installments of the purchase money be secured by
mortgage before delivery of such deed. When the buyer offers to pay the full
amount of the purchase money in cash, if best for the interests of the
creditors of the assignor, the court may order that it be accepted, and direct
its distribution.

If it is for the best interests of the creditors of the
assignor, the probate court may order the assignee or trustee for the benefit
of creditors to sell without recourse any notes taken for deferred payments at
not less than their face value with accrued interest, and direct the
distribution of the proceeds.

When real property is to be sold as provided in sections
1313.21 to
1313.31, inclusive, of the Revised
Code, the husband or wife of the assignor may be made a party, and file an
answer in the probate court to have such real property sold free of his or her
contingent right of dower and to allow him or her in lieu thereof, out of the
proceeds of the sale, such sum of money as the court deems the just and
reasonable value of the dower interest therein. Such answer has the force and
effect, in all respects, of a deed releasing such contingent dower interest in
such real property.

When the assignor and his wife jointly have executed a mortgage
upon real property assigned for the benefit of creditors, or when the assignor
alone has executed a mortgage upon any of such real property to secure the
payment of purchase money, or a part thereof, the probate court shall order its
sale free from the contingent right of dower of such wife, and shall determine
the just and reasonable value of her dower interests in the proceeds of sale
remaining after the payment of such encumbrances as preclude her right to dower
therein.

When satisfied that it would be for the advantage of the
creditors of the assignor, and on written application therefor by three-fourths
in number and amount of such creditors, the probate court may order any
business carried on by the assignor at the time of the assignment, to be
continued by the assignee or trustee. When the court deems it to the advantage
of the creditors to discontinue the business, it shall order that to be done,
and also allow to the assignee or trustee for the benefit of creditors such
compensation for conducting it, as may be just, in addition to the fees allowed
by sections
1313.50 and
1313.51 of the Revised Code.

The probate court shall order the payment of all encumbrances
and liens upon any property sold for the benefit of creditors, or rights and
credits collected, out of the proceeds thereof, according to priority.

When real property to be sold, or which has been contracted to
be sold by an assignor prior to the assignment for the benefit of creditors, is
encumbered with liens, or when questions in regard to the title, or the dower
estate of the wife or widow of the assignor, require a decree to settle them,
the assignee may commence a civil action therefor in the court of common pleas
or probate court of the proper county, making all persons in interest,
including the wife or widow of the assignor, parties.

Upon hearing, the court shall order a sale of the premises, or
the completion of such contracts of sale, the payment of encumbrances and the
contingent dower interest of the wife or widow, subject to section
1313.35 of the Revised Code, and
determine the questions involved as to title to the property.

The proceeds of all the real property of the assignor sold by
court order for the benefit of creditors, after payment of liens, encumbrances
and the contingent dower rights and interest of his wife or widow, must be
reported to the probate court by the assignee, and disposed of as provided in
sections 1313.01 to
1313.59, inclusive, of the Revised
Code.

Sections
1313.21 to
1313.31, inclusive, of the Revised
Code relating to the wife of the assignor as a party to the proceedings
thereunder and her rights by virtue thereof, and also relating to ordering
property sold at private sale, and upon terms of credit, apply to proceedings
under sections
1313.33 and
1313.34 of the Revised Code.

Sections
1313.21 to
1313.35 of the Revised Code do not
impair the right of a person to an exemption under division (A)(1) of section
2329.66 of the Revised Code, or
the mode provided for enforcing the right.

Sections
1313.01 to
1313.59, inclusive, of the Revised
Code do not take away or limit the jurisdiction of any court of record in which
an action to foreclose a mortgage, to quiet title, or in any way to affect the
title to or possession of all or part of the real property assigned is pending,
at date of an assignment for the benefit of creditors. In such action the
assignee may be made a party, with right to defend, and have such decrees,
orders, or judgments, as are necessary for the proper administration of his
trust, in any surplus after paying liens thereon, asserted in the action.

When an assignee or trustee for the benefit of creditors
commences an action, in the court of common pleas or probate court of the
proper county, to sell real property, making all persons in interest parties
thereto, and at the time fixed for hearing his petition the court is satisfied
that all parties in interest have been notified of its pendency, and that such
land ought to be sold, if the petition seeks to have it or any part thereof
laid out in lots, and the court finds it will be to the advantage of all
parties in interest to have this done, it also shall authorize the survey and
platting of the land. If it approves the survey and plat made for that purpose,
the court shall authorize the assignee or trustee, on behalf of all the parties
in interest, to sign, seal, and acknowledge the plat in that behalf for record.

Creditors must present their claims within six months after
publication of the notice provided for in section
1313.14 of the Revised Code,
unless further time is given by the probate court for their allowance. The
assignee or trustee for the benefit of creditors shall indorse his allowance or
rejection thereon. Persons whose claims are rejected are required to bring suit
against such assignee or trustee to enforce such claims within thirty days
after they were rejected. If a claimant recovers, the judgment shall be against
the assignee or trustee, that he allow the claim in settlement of his trusts,
with or without the costs, as the court deems right.

Immediately after the expiration of six months time, within
which creditors must present their claims, the assignee or trustee for the
benefit of creditors must file in the probate court a report of all claims
presented to him for allowance, their several amounts, the date from which, and
the rate at which they are entitled to interest, specifying claims allowed and
those rejected, with the date of allowance or rejection, what claims are held
under advisement, and the post-office address of each creditor whose claim is
allowed or rejected.

If the assignor or a creditor files in the probate court a
written requisition on the assignee or trustee for the benefit of creditors to
disallow any claims presented which he has not reported as disallowed, and
enters into bond to said assignee or trustee in such amount and with such
sureties as the court approves, conditioned to pay all the costs and expenses
of contesting them by the order of the court, such claims shall be disallowed,
although theretofore allowed by the assignee or trustee. The assignee or
trustee must forthwith give written notice thereof to the creditors, or their
attorneys, whose claims are so disallowed. Thereupon the same proceedings shall
be had as required in other cases of disallowance under sections
1313.39 and
1313.40 of the Revised Code.

Each person presenting and filing a claim against the estate of
the debtor, before it is allowed or any payments made thereon, must make and
file an affidavit setting forth that the claim is just and lawful, the
consideration thereof, and what counterclaims exist thereto; what collateral or
personal security the claimant holds for the claim, or that he has no security.
The assignee or trustee for the benefit of creditors, or a creditor may examine
the claimant under oath touching such collateral or other security, or any
other matter relating to his claim, within such time and under such regulations
as are prescribed by the probate judge. A surety of, or person jointly liable
with, the assignor, may be allowed to present and prove the claim on which he
is so bound; but the dividend thereon shall be payable to the party holding it.
If the latter proves such claim, then the allowance and dividend on it must be
as proved by him.

Taxes of every description assessed against the assignor upon
personal property held by him before his assignment for the benefit of
creditors must be paid by the assignee or trustee out of the proceeds of the
property assigned in preference to any other claims against the assignor.

Persons who have performed labor in the service of the assignor
within twelve months next preceding an assignment for the benefit of creditors,
are entitled to receive out of the trust funds, before the paying of other
creditors, the full amount of wages due for such labor not exceeding three
hundred dollars. This section and section
1313.43 of the Revised Code do not
prejudice or affect securities given, or liens obtained in good faith, for
value, but judgments by confession on warrants of attorney rendered within two
months prior to such assignment, or securities given within such time to create
a preference among creditors, or to secure a pre-existing debt other than upon
real property for the purchase money thereof, are of no force or validity as
against such claims for labor, in case of assignment, to the extent provided in
this section.

An assignee or trustee for the benefit of creditors must file
an account with the probate court at the expiration of eight months from his
appointment and qualification, and as often thereafter as the court orders.
Such account shall contain a full exhibit of all his doings as such, up to the
time of filing, together with the amount of all claims remaining uncollected,
and the amount thereof which in his opinion may thereafter be collected.
Exceptions may be filed to the accounts by parties interested, in the manner
provided in cases of accounts of administrators or executors. Such accounts
shall be examined and the exceptions thereto heard by the court, in the manner
provided for the settlement of the estates of deceased persons. Upon the filing
of such accounts, the court shall fix a time for the hearing, and publish
notice thereof as in the case of the filing of the account of an executor or
administrator.

The probate judge shall cause notice of the filing of accounts
by assignees or trustees for the benefit of creditors, and commissioners of
insolvents, to be published in some newspaper of the county, specifying when
such accounts will be heard, not less than three weeks after the publication of
such notice, at which time it shall be competent, for cause, to allow further
time to file exceptions to such accounts. The costs of such notice, if more
than one account is specified in the same notice, must be paid in equal
proportions by the assignees, trustees, or commissioners respectively.

The probate judge may examine under oath, all assignees or
trustees for the benefit of creditors and commissioners of insolvents, touching
their accounts. Such judge may reduce such examination to writing, and require
such assignee, trustee, or commissioner to sign it. Such examination must be
filed with the papers in the case.

When, on settlement, a balance is shown in the hands of the
assignee or trustee for the benefit of creditors, subject to distribution among
the general creditors, a dividend shall be declared by the probate judge,
payable therefrom equally among all the creditors entitled, in proportion to
the amount of their respective claims against the assignor, including those
disallowed, which the claimant has begun suit to establish as required in
section 1313.39 of the Revised Code, and
claims held under advisement. Notice of the making of such dividend, and the
time and place of its payment, shall be given by advertisement once, in a
newspaper published and of general circulation in the county in which such
trust is administered, and in such other way as the court orders. A report must
be made within sixty days after the date fixed of the dividends paid and of
those uncalled for and unpaid at that time. The court then shall cause a new
notice to be given to the owners of unpaid dividends, in such way as it
directs. If not demanded within twelve months thereafter, such dividends must
be divided pro rata among the other creditors, until they are paid in full, and
any remainder paid to the assignor or his legal representatives.

Dividends provided for in section
1313.48 of the Revised Code
reserved for claims disallowed, or held under advisement, when actions to
enforce their allowance have been commenced, shall be held until the actions
terminate, when they shall be paid on claims the allowance of which has been
ordered. Otherwise, such dividends must be distributed pro rata among other
creditors not paid in full, or refunded to the assignor.

Before a dividend provided for in section
1313.48 of the Revised Code is
declared, the assignee or trustee for the benefit of creditors may be allowed
the following commission upon the amount of the personal estate collected and
accounted for by him, and of the proceeds of the real property sold under an
order of court for the payment of debts, which must be received in full
compensation of all his ordinary services:

Such allowance shall be made as the probate court considers
just for necessary expense, extraordinary expenses, extraordinary services not
required of an assignee for the benefit of creditors in the common course of
his duty, and such reasonable counsel fees as were necessary for the proper
administration of the assignment, whether performed by the assignee or trustee
as attorney, or such other as he employs. No such further allowance,
extraordinary expenses or services, or attorney fees, shall be made unless a
bill of items is filed, showing such actual and necessary or extraordinary
expenses and services, or attorney fees, together with the affidavit of the
person incurring such expenses or performing such services, that they were done
for, and were necessary to, the assignment; that the amount charged therefor is
reasonable, and not more than is usually paid for such services. When such
services have been performed by persons other than the assignee or trustee, the
latter also must file an affidavit, stating that such services were necessary
for the proper administration of the assignment, that they were performed under
his direction, that the charges therefor are fair and reasonable, and that the
full amount thereof has been paid to the party performing such services.

A sale, conveyance, transfer, mortgage, or assignment, made in
trust or otherwise by a debtor, and every judgment suffered by him against
himself in contemplation of insolvency and with a design to prefer one or more
creditors to the exclusion in whole or in part of others, and a sale,
conveyance, transfer, mortgage, or assignment made, or judgment procured by him
to be rendered, in any manner, with intent to hinder, delay, or defraud
creditors, is void as to creditors of such debtor at the suit of any creditor.
In a suit brought by a creditor of such debtor for the purpose of declaring
such sale void, a receiver may be appointed who shall take charge of all the
assets of such debtor, including the property so sold, conveyed, transferred,
mortgaged, or assigned, and also administer all the assets of the debtor for
the equal benefit of the creditors of the debtor in proportion to the amount of
their respective demands, including those which are unmatured.

Section
1313.56 of the Revised Code does
not apply unless the person to whom such sale, conveyance, transfer, mortgage,
or assignment is made, knew of such fraudulent intent on the part of such
debtor. Said section does not vitiate or affect any mortgage made in good faith
to secure any debt or liability created simultaneously with such mortgage, if
such mortgage is filed for record in the county wherein the property is
situated, or as otherwise provided by law, within three days after its
execution, and when, upon foreclosure or taking possession of such property,
the mortgagee fully accounts for the proceeds thereof.

Any creditor as to whom any of the acts or things prohibited in
sections 1313.56 and
1313.57 of the Revised Code are
void, whether the claim of such creditor has matured or will thereafter mature,
may commence an action in a court of competent jurisdiction to have such acts
or things declared void. Such court shall appoint a trustee or receiver under
sections 1313.01 to
1313.59 of the Revised Code, who,
upon being duly qualified, must proceed by due course of law to recover
possession of all property sold, conveyed, transferred, mortgaged, or assigned,
and to administer it for the equal benefit of all creditors, as in other cases
of assignments to trustees for the benefit of creditors. An assignee as to whom
anything mentioned in sections
1313.56 and
1313.57 of the Revised Code is
void, likewise must commence a suit in a court of competent jurisdiction to
recover possession of all property sold, conveyed, transferred, mortgaged, or
assigned, and if recovered, shall administer it for the equal benefit of all
creditors as in other cases of assignments to trustees for the benefit of
creditors.

If the assignee fails or declines, upon notice by any creditor,
to institute suit as provided in section
1313.58 of the Revised Code, such
creditor may himself commence it within five days after serving notice upon the
assignee to commence suit, and the procedure and administration shall be the
same as is provided for in sections
1313.01 to
1313.58, inclusive, of the Revised
Code for suits begun by a creditor.